I found the Flex 2 TechNote which suggested to add
"-use-network=false -library-path+=locale/{locale}
-source-path+=locale/{locale} -locale=en_US" as compiler options.

So I tried adding the above options into the build.bat files
I can find at:
a) C:\Program Files\Adobe\Flex Builder
3\sdks\3.1.0\samples\explorer
b) C:\Program Files\Adobe\Flex Builder
3\sdks\3.1.0\templates\automation-runtimeloading-files
but still the error persists.